Bermuda has outlined the conditions of its approval as a qualified jurisdiction by a working group of the National Association of Insurance Commissioners (NAIC).
Commenting on the recommendation, Jeremy Cox, CEO of the Bermuda Monetary Authority (BMA), commented: “The [US] remains Bermuda’s largest trading partner. As such, being approved as a qualified jurisdiction is highly relevant for Bermuda in terms of potentially facilitating efficiencies in the cross-border operations of Bermuda reinsurers with the US insurance market.”
“While we recognise the process is not yet complete, we look forward to receiving the NAIC’s final approval in the coming weeks.”
If approved by the full NAIC membership, Bermuda would be placed on the NAIC's first List of Qualified Jurisdictions, effective 1 January 2015.
The group’s recommendation went on to say that Bermuda’s status as a qualified jurisdiction is applicable to reinsurers licensed as Class 3A, Class 3B and Class 4, and Long-Term insurers of Class C, Class D and Class E.
The approved classes will be eligible to be certified for reduced reinsurance collateral requirements under the NAIC's Credit for Reinsurance Model Law.
It also recommended that the authority be re-evaluated every five years after 1 January 2015.
Up to 240 Bermuda companies may stand to benefit from the NAIC decision, including some of the island’s largest insurers and reinsurers, many of them represented by the Association of Bermuda Insurers and Reinsurers (ABIR).
The German Federal Financial Supervisory Authority; the French Autorité de Contrôle Prudentiel et de Résolution; the Central Bank of Ireland; and the UK's Prudential Regulation Authority of the Bank of England have also been recommended for approval.
In August 2013, the BMA was the first insurance supervisor to agree to participate in an expedited review under the NAIC Process. In December 2013, Bermuda was granted conditional qualified jurisdiction status and the BMA continues to fully participate with the NAIC.
The NAIC Process was developed to evaluate the regulatory frameworks of non-US jurisdictions for reinsurance collateral reduction purposes.
